Which renowned startups were rejected by investors?
Gaining a little visibility feels virtually impossible when you’re a new entrepreneur. No matter how great your business idea may seem, slipping a foot into the door of big-time investors is a daunting challenge.
Many entrepreneurs get so many doors slammed in their faces that they simply give up. Do yourself a favour and rise above the mockery.
Believe it or not, the billion dollar ideas of some of the globe’s most iconic businessmen and women were rejected multiple times before somebody finally decided to give them a shot. It takes a lot of brass and determination to become a successful business person; therefore, if you want your company to become successful, you should relish every rejection. Learn from each refusal, tinker with your business model and become a stronger business leader.
In order to help you find that courage, here are a few examples of top-flight companies that battled through scores of rejection letters before hitting it big.
Google is an all-powerful empire in its own rite. The company has a hand in everything from mobile development and social media to wearable technology and driverless cars. Last year, Google pulled in over $66bn in revenues, and share prices never stop rising. Bearing all that in mind, it’s difficult to believe that anybody would ever refuse to invest in the earth-shattering company.
When entrepreneurs Larry Page and Sergey Brin first got started on their new search engine project, the duo decided it was proving too difficult to try and develop the site whilst working towards their degrees at Stanford University. They decided they would try and sell Google in order to focus on their education, and so they approached George Bell, the CEO of online service Excite.
Their asking price? A measly $1m.
That initial offer was rejected by Bell, and so haggling ensued. Eventually, negotiations led to an offer of $750,000. This time, it was cofounders Page and Brin that rejected Bell. They asked for a sizeable investment rather than a buyout, and Bell walked away. Five months later, two companies agreed to invest $25 million in Google. The rest, as they say, is history.
Nutmeg
It’s relatively easy to bounce back from one rejection — and not terribly difficult to shake off five or ten. But getting turned down 45 times would be enough to turn most individuals to tears. Instead of crying into his pillow, entrepreneur Nick Hungerford simply tried harder.
In 2010, Hungerford launched a scrappy investment management site called Nutmeg. Despite the relative success of other investment management companies, the majority of investors Hungerford approached refused to touch Nutmeg with a ten-foot pole. Why? They had never encountered an online-only investment firm.
Hungerford started to seek out funding for the company in 2010, visiting Silicon Valley in California to meet with tech investors. He went to the region having previously gained an MBA from the nearby Stanford University. The first 45 people he met with refused to part with their money.
A lot of the feedback was personal, too. Hungerford said later that many venture capitalists he met with appeared keen on the idea — but didn’t think Hungerford was the right man to do it. Understandably, he began to question whether he was doing the right thing. It’s worth noting that Hungerford was also struggling under the stereotypical lifestyle of a startup entrepreneur at that time — working from his friend’s garage and sleeping on the floor. He couldn’t do that forever.
Bearing that in mind, the fledgling entrepreneur resolved to either secure investment by December 2010, or abandon the startup and get a “real” job. Fate was on his side. The 46th meeting proved to be the one that set Nutmeg on the path to success. It was with Tim Draper, owner of venture capital provider DFJ and one of the earliest investors in Skype. Draper was quick to say yes to Nutmeg, and a slew of other investments followed.
The official company formation for Nutmeg took place in the UK in 2011, and it opened for business last year. Its online operation and lower overheads for physical offices mean that the company can charge substantially lower fees.
Today, Nutmeg is one of the UK’s fastest-growing small financial companies and has over 35,000 customers. It has been named one of the most innovative and influential financial technology site in Europe, and is on track for a massive expansion.
Hotmail
A lot of web users probably think of Hotmail as a relatively vintage email provider. It was hugely popular in the late nineties, but the majority of Millennials would like to think they’ve moved on to more adult messaging platforms. The truth is, almost all of us are still using Hotmail on a daily basis –and it’s actually more influential today than ever.
Hotmail was founded in 1996 by California Institute of Technology students Jack Smith and Sabeer Bhatia. After a brief stint working as a programmer for Apple, Bhatia developed the revolutionary idea of establishing an email service available via a web browser. The only problem? Funding.
The idea was completely untested, and made a lot of investors nervous. Consequently, Bhatia and Smith were turned down by just about every venture capitalist firm they approached. In fact, Hotmail was rejected no less than twenty times before investment firm Draper Fisher Jurvetson finally agreed to bankroll the $300,000 project.
By 1998, Hotmail had taken the web by storm, and raised eyebrows at leading engineering firm Microsoft. Microsoft took on Hotmail for a cool $400m, and it was eventually rebranded under the company’s umbrella of coveted Office products. Today, most users know Hotmail as Outlook.com. Around 400m people use the email platform on a daily basis, and it’s the second most valuable email provider on the planet.
Try, try again
The moral of these stories? Don’t get discouraged by early rejections. Learn from them. Ask for constructive feedback, and utilise each criticism as a benchmark for improvement. So long as stay focused and demonstrate a little adversity, your startup idea very well could end up to be the next Google.
Would you give up if potential investors rejected your startup proposition once? Or twice? What if you were turned down 45 times?
Rachel Craig is part of the media team at Formations Factory and is responsible for developing and maintaining the online presence of the company. Formations Factory is a company formation service provider in the UK.
